Abu Dhabi, the capital of the UAE, is one of the most exciting places to start a business. Setting up a business in Abu Dhabi can open doors to a world of opportunities, thanks to its strategic location, robust infrastructure, and business-friendly environment.
The city is known for its diverse and growing industries. While Abu Dhabi has traditionally been a global leader in oil and gas, it’s now making waves in other sectors like renewable energy, technology, tourism, and finance. In fact, for the first three quarters of 2024, Abu Dhabi’s GDP grew by 3.9%, with non-oil activities contributing to a 5.9% increase.
With so much to offer, Abu Dhabi is truly a city of possibilities. If you’re too considering company formation in Abu Dhabi, let’s explore how you can make it happen.
Benefits of Company Formation in Abu Dhabi
Company formation in Abu Dhabi offers several significant benefits for businesses:
1. 100% Foreign Ownership
In certain sectors and free zones, businesses can enjoy 100% foreign ownership. This provides full control over your operations, a significant advantage for international entrepreneurs who may be concerned about local ownership requirements in other parts of the world.
2. Tax-Free Incentives
Abu Dhabi offers tax advantages that make it an appealing destination for businesses. There is no personal income tax, and most businesses in free zones benefit from zero corporate tax for up to 50 years.
3. Seamless Access to GCC and Middle East Markets
Abu Dhabi is an excellent gateway to the larger Gulf Cooperation Council (GCC) region and the broader Middle Eastern market. For UK investors, this means easy access to a market of over 50 million people within the GCC alone.
4. Ease of Doing Business and Transparent Regulations
Abu Dhabi offers a highly transparent and efficient regulatory environment for foreign investors. The legal framework is clear, with easy procedures for setting up a business.
5. Strong Economic Growth
Abu Dhabi’s economy is growing rapidly, with non-oil sectors like technology, finance, and tourism contributing significantly. For the first three quarters of 2024, the city’s GDP grew by 3.9%, with non-oil activities increasing by 5.9%.
6. World-Class Financial Services and Banking
Abu Dhabi is home to some of the most prominent financial institutions in the region, including the Abu Dhabi Investment Authority (ADIA) and other global banks. UK investors can take advantage of sophisticated banking and financial services, with the ability to open multi-currency accounts, obtain business loans, and access venture capital funding for new ventures.
Types of Company Formation in Abu Dhabi
When setting up a business in Abu Dhabi, you have three main options: Mainland Companies, Free Zone Companies, and Offshore Companies. Each has its own benefits depending on your business needs.
1. Mainland Company
A Mainland company is registered with the Department of Economic Development (DED) in Abu Dhabi, allowing you to operate within the local market without restrictions.
Benefits:
- Operate anywhere in the UAE.
- Engage in a wide range of business activities.
- Eligibility to bid for government projects.
- Choose your office location freely.
2. Free Zone Company
A Free Zone company is established in special economic zones offering benefits like 100% foreign ownership and tax exemptions.
Popular Free Zones in Abu Dhabi:
- Masdar City Free Zone
- Twofour54
- Abu Dhabi Global Market (ADGM)
- Khalifa Industrial Zone (KIZAD)
Benefits:
- 100% foreign ownership.
- Corporate and income tax relief.
- Faster and easier company formation.
- Modern facilities for business growth.
- No custom duties.
3. Offshore Company
Offshore companies are registered outside the UAE but have a presence in Abu Dhabi. They are typically used for asset protection and international business.
Benefits:
- High level of privacy for company owners.
- Exemptions from corporate and income tax.
- Ideal for holding assets and risk management.
- No need for a physical office in Abu Dhabi.
Legal Structures for Businesses in Abu Dhabi
There are several legal structures available for businesses in Abu Dhabi, each offering different advantages based on the type of business, ownership requirements, and operational goals.
1. Sole Proprietorship
A sole proprietorship is a business owned and operated by a single individual. The owner has full control and responsibility for the business.
2. Limited Liability Company (LLC)
A Limited Liability Company (LLC) is one of the most common structures in Abu Dhabi. It requires at least one local partner (UAE national) who holds 51% of the shares, with foreign investors holding up to 49%.
3. Joint Venture (JV)
A Joint Venture is a partnership between two or more businesses or individuals to work on a specific project or business venture.
4. Branch Office
A branch office is a subsidiary of a foreign company. It can operate under the parent company’s name but must adhere to UAE laws and regulations.
5. Free Zone Entity
A free zone company is established within one of Abu Dhabi’s free zones, such as Masdar City or ADGM. It offers several advantages like full foreign ownership, tax exemptions, and simplified company formation.
6. Representative Office
A representative office is a branch of a foreign company that can only carry out marketing and promotional activities. It cannot conduct direct sales or engage in commercial transactions.
Documents Required for Company Formation in Abu Dhabi
To set up a company in Abu Dhabi, you’ll need to provide several key documents for registration:
- Trade name reservation certificate
- Initial approval certificate
- Passport copies of shareholders and partners
- Proof of address (utility bill, rental agreement, etc.)
- Memorandum of Association and Articles of Association
- Lease agreement or Ejari for office space
- Passport-sized Photographs
- UAE Residence Visa (if applicable)
How to Set Up a Company in Abu Dhabi?
Company formation in Abu Dhabi involves a clear process, from selecting the right legal structure to obtaining necessary approvals. Here’s a step-by-step process:
1. Define Your Business Activity
The first step is to decide what type of business you want to set up and the activities you plan to engage in. Ensure your business activity aligns with local regulations.
2. Reserve Your Trade Name
Choose a unique and appropriate name for your company. The name should comply with local naming conventions (e.g., no offensive words or religious references). Submit the trade name for approval to the Department of Economic Development (DED) to reserve it officially.
3. Apply for a Business License
Depending on the type of company (Mainland, Free Zone, or Offshore), apply for the appropriate business license with the relevant authority (e.g., DED, Free Zone Authority). Business licenses could be commercial, professional, industrial, or tourism related. Offshore
4. Lease Office Space
Most businesses in Abu Dhabi require a physical office to operate. For mainland businesses, this is a must. For free zone businesses, some zones offer virtual offices or flexi-desk options.
5. Submit and Pay for the License
After finalizing the office space, submit all required documents, including the lease agreement, to the relevant authority. Pay the fees associated with the business license and any registration fees. These will vary depending on your business activity and legal structure.
6. Obtain Additional Approvals (if Necessary)
Some businesses require additional approvals from regulatory bodies or authorities specific to their industry (e.g., health, education, finance).
7. Open a Corporate Bank Account
Once your business is registered, open a corporate bank account with a bank in the UAE. Some legal structures, like LLCs, may require a minimum capital deposit in the bank before receiving your license.
8. Apply for Visas
Once your business is set up, apply for UAE residency visas for the owners, employees, or partners. The number of visas you can apply for depends on the size of your office space and the business setup.
What is the Company Formation Cost in Abu Dhabi?
The cost of an Abu Dhabi business license can range from AED 10,000 to AED 28,000 or more, depending on the business activity and location. However, the overall company formation cost in Abu Dhabi varies depending on several factors, such as business activity, legal structure, location (mainland or free zone), and the number of visas required.
It’s essential to evaluate your business needs and seek professional advice from Shuraa Business Setup to get an accurate estimate of the setup costs.
Why Choose Shuraa for Company Formation in Abu Dhabi?
Abu Dhabi offers great opportunities for entrepreneurs and investors with its growing economy and business-friendly environment. Whether you’re looking to start a business on the mainland, in a free zone, or offshore, there are plenty of options to suit your needs.
Taking the first step toward setting up your business in this exciting city is easier than you think. At Shuraa, we have over 23 years of experience in helping businesses get started. Our team makes the entire process simple, from choosing the right setup to getting your licenses and visas. Let Shuraa help you make your business dream a reality in Abu Dhabi.
